This work flow seems to get around the bug, you just have to load th emobile device manually as opposed to using the server download.
1. Create Project in project Center
2. Click the button in top left
3. Click Export Mobile Project (this creates a .amp file)
4. Save the .amp file to my local drive
5. using active sync, open explore device
6. Navigate to Documents\ArcGIS Mobile
7. Created a folder with the same name as the .amp file without the .amp
8. Copied the .amp file to that folder
9. Opened ArcGIS Mobile - it successfully opened the project